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Tuesday, January 24, 2012

Last Night's GOP Presidential Debate and the Community Reinvestment Act

by Jeff Sovern

During last night's debate, Representative Paul seemed to attribute the foreclosure crisis partly to the Community Reinvestment Act when he said:

Well, the government . . . gave them a mess. They gave them a financial system that literally created this problem. . . . .[T]he Community Reinvestment Act added more fuel to it, you know, forcing banks to make loans that are risky loans.So the whole bubble was easily seen. The consequences were anticipated. It was all government manufactured.

The candidates also attacked the Dodd-Frank Act. For example, Governor Romney said "Dodd- Frank . . .made it harder for banks to renegotiate mortgages to help people get out." And Speaker Gingrich chimed in: "If they would repeal [Dodd-Frank] tomorrow morning, you would have a better housing market the next day." Yes, and more foreclosures in the future. Sigh.